John Herrmann – VP and General Counsel Stan Erck – President and CEO Fred Driscoll – VP, CFO and Treasurer Louis Fries – VP, Clinical and Medical Affairs

George Zavoico – MLV & Company Greg Wade – Wedbush Ted Tenthoff – Piper Jaffray Vernon Bernardino – Brinson Patrick

Good day, ladies and gentlemen, and welcome to Novavax Third Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. Later we’ll conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. John Herrmann. Sir, you may begin.

Thank you. Good morning, everyone. This is John Herrmann, Vice President and General Counsel of Novavax. Thank you for joining us on today’s third quarter 2012 financial results conference call. Both the earnings release from this morning and an archive of this earnings call can be found on the company’s website at novavax.com. On today’s call are Novavax’s President and CEO, Stan Erck; our Vice President and CFO, Fred Driscoll; our Chief Medical Officer, Dr. Greg Glenn; and our Vice President of Medical Affairs, Dr. Louis Fries. Before we begin our prepared remarks, I need to remind you that we will be making forward-looking statements during this teleconference that could include financial, clinical or commercial projections. Statements relating to future financial or business performance, conditions or strategies and other financial and business matters including expectations regarding revenue, operating expenses, cash usage and clinical developments and anticipated milestones, are all forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Novavax cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Further information on the factors and risks that could affect Novavax’s business, financial conditions and results of operations are contained in Novavax’s filings with the SEC, which are available at www.sec.gov. These forward-looking statements are made only as of the date of today’s call and Novavax assumes no duty to update these statements. That said, I’ll now turn the call over to Stan.

Thanks, John, and good morning to everyone. Last quarter I highlighted the fact that Novavax was beginning to see the fruits of our efforts over the last 18 months. Our strong momentum has continued into our last call and I’m pleased to report on the tremendous progress we’ve made during and since the third quarter. So let me run through some of the highlights. In the last seven months, we’ve initiated five new clinical trials, vaccinating over 1,700 subjects in four different product indications and closing seasonal influenza, pandemic influenza, RSV inability and the RSV in the women of childbearing age and RSV and the women of childbearing age. We’ve reported safety and immunogenicity for three of these trials. We entered new collaboration with PATH for RSV, a world renowned non-profit that is now providing fund for our maternal immunization program and we’ve significantly strengthened our balance sheet by increasing our institutional ownership and bringing our cash horizon based on term projections of cash usage into early 2015. As usual, I will first discuss our recent accomplishments and then turn the call over to Fred to summarize the quarterly financial results and after that we’ll take questions. So let me begin with the pandemic influenza vaccine program and a positive top line results we announced two weeks ago from the two Phase I studies conducted under our contract with BARDA. These are identical randomized observer blind dose ranging placebo-controlled trials touching our H5N1 pandemic influenza vaccine in adults 18 to 49 years old. The only difference between the two trials were use of two different adjuvants. The primary objectives of the two trials were to demonstrate the safety and immunogenicity of our H5N1 vaccine candidate at bearing dose levels with and without an adjuvant. A total of 666 healthy adults 18 to 49 year old were enrolled in the two trials. Each subject received intramuscular injections of vaccine or placebo at a zero and 21 and is being followed for 13 months after the first dose. The day I’m referring to it a day and that we reported a couple of weeks ago relate to safety and immune responses during the first 42 days. To demonstrate the immunogenicity, we measured hemagglutinin inhibition or HI responses. If you follow influenza vaccine development, we know that the two primary measurements of immunogenicity that are commonly used for an influenza vaccine on the level of zero protection which is the percent of subjects to achieve a certain level of HAI titers and zero conversion which is defined as the percent of subjects who achieved a four-fold increase in the level AJI titer. FDA utilizes these measurements as criteria for filling accelerated approval. Although these are Phase I trials, it’s important to note that they were large Phase I trials, which improves our confidence about the results. We were able to demonstrate a number of important points about our avian influenza vaccine candidate that we believe is very important. So first, we met our primary endpoints, which were to demonstrate that all three vaccine candidates were safe and generated robust immune response to the vaccine. The unadjuvanted vaccine that 45 micrograms per dose induced immune responses that met both FDA criteria after two doses, which is an unprecedented result, a definitely worth pursuing further. The adjuvanted vaccine candidates demonstrated strong adjuvant activity and provided statistically significant antigens bearing down to the lowest level, which was 3.75 micrograms at which dose the immune response remained at a very high plateau. This result indicates that further dose bearing may be available. Vaccine (inaudible) virus responses of all adjuvanted doses easily fulfilled FDA seroconversion into seroprotection criteria for accelerated approval. The data suggests that even lower doses of adjuvant or antigen or both could be successful. When tested against a played one drift straight our unadjuvanted candidate gave a substantial seroconversion rate 54% while vaccine with one of the adjuvanted candidates gave seroconversion and seroprotection rates up to 80% meeting FDA requirements at all dose levels at least at the point estimate. The response measure to the draft variant antigen is especially encouraging as the data suggests their vaccine may be protective even when the vaccine strain did not perfectly match pandemic power strain, which is an important consideration in the emerging response to a pandemic. In summary, with this trial, we have demonstrated that we can produce antigens from avian influenza strains that are at least as or more immunogenic as any described in medical literature to date. We believe these results are sufficiently positive to allow us to advance our avian influenza vaccine program into later stage clinical testing that are now working with BARDA on developing that clinical pathway 4. Also, Dr. Louis Fries, our VP of Medical Affairs will be presenting data at the upcoming Influenza Congress Conference being held in Washington, DC on November 13. So moving our pandemic to our seasonal influenza vaccine program. In July, we announced positive top line results from the Phase II dose-ranging clinical trial of our quadrivalent vaccine. We reviewed these results in detail on our last call. So I’ll just remind you that our quadrivalent vaccine with the FDA 0 protection requirements for all 4 viral stains with 0 conversion levels from 3 out of the 4 strains with a good safety profile. We’re taking the time to optimize our upstream and downstream manufacturing processes and to optimize our portfolio of medical assays. We will work with BARDA to define our clinical pathway for licensure and begin GMP manufacturing of our quadrivalent vaccine with the expectation that we’ll initiate clinical trials in the second half of 2013. We expect that the pandemic and seasonal product candidates will progress toward licensure in parallel. Turning now to RSV, in September, we presented clinical findings from our RSV vaccine development program at the 8th Annual International Respiratory Virus Symposium Meeting, which was held in Santa Fe, New Mexico. The data showed our vaccine candidate induced neutralizing antibody responses to multiple sites on the fusion protein, what we call the F protein that was also found to induce palivizumab-like antibody responses – response levels in our vaccine that are up to 10-fold higher levels than the level identified as being protective. As I’ve said in previous calls, palivizumab is a monoclonal antibody marketed by MedImmune as Synagis, which is effective in the treatment of RSV. We believe these data to be unique to our vaccine candidate. Based upon the results of our initial RSV trial, we’re generating a lot of interest from outside companies and organizations. PATH is an international non-profit organization, whose goal is to transform global health through sponsorship of innovative technologies. In July, we entered a research collaboration with PATH, which is provided approximately $2 million in initial funding to support a Phase II dose-ranging clinical trial in women of childbearing age. We initiated the study in early October and was fully enrolled in less than two weeks. The current study being partially funded by PATH as a randomized blinded placebo-controlled Phase II study designed to evaluate the immunogenicity and safety of two dose levels of our RSV vaccine with and without aluminum phosphate as an adjuvant. The study enrolled 330 women at childbearing age who are receiving one or two intramuscular injections at each dose level of vaccine or placebo at zero and 28. Safety and immunogenicity will be evaluated over six fourth month periods respectively. We expect to report top line results from the trial through day 56 of durations in the first quarter of 2013. So although PATH’s initial funding was just for this trial, the intent of our collaboration is for PATH to continue to support the ongoing development of our vaccine, specifically for maternal immunization at 50% funding. This collaboration underscores PATH’s focus of protecting newborns in low resource countries. Another important market for an RSV vaccine is the protection of elderly during the annual RSV season, much like the flu season. A week after the start of the RSV trialed women, we initiated a Phase I dose-ranging study of our RSV vaccine in elderly patients and this study is now fully enrolled as well. Randomized, blinded placebo-controlled study will evaluate the immunogenicity and safety of two doses of our RSV vaccine candidate with and without aluminum phosphate as an adjuvant. The study is similar to the Phase II RSV study in women of childbearing age I just discussed, but enrolled 220 adults, 60 years of age and older who will receive a single intramuscular injection of our RSV vaccine or placebo, plus a single dose of licensed influenza vaccine or placebo at day zero and 28. Safety and immunogenicity will be evaluated for up to one year. We expect to report top line results from the study in the second quarter of 2013. We continue to make progress developing our vaccine platform in India, through our joint venture with Cadila Pharmaceuticals. Near term product candidates for influenza and rabies are progressing well. I expect to be reporting on the clinical development of these programs in India throughout 2013 along with other preclinical programs including malaria. So I’m very pleased with the progress we’ve made in parallel with our success in discovery, process and analytical development and the clinical development of these programs. We’ve started to build our balance sheet in order to support these successes. As announced two weeks ago, we completed a $27 million direct placement with sophisticated life-science institutional investors who are familiar with the company. We expect that this additional investment in concert with our focus on managing our cash burn rate will fund the company into 2015. It’s our intent to maintain sufficient cash balances, so that we can pursue our successes on our timetable. With that, I will now turn the call over to Fred.

Thanks, Stan. For the third quarter of 2012, we reported a net loss of $7.2 million or $0.05 per share, compared to a net loss of $3.2 million or $0.03 per share for the third quarter of 2011. For the nine months ended September 30, 2012, the net loss was 20.5 million or $0.16 per share, compared to a net loss of $15.7 million or $0.14 per share for the same period in 2011. Revenue in the third quarter of 2012 increased to $5.8 million as compared to $5 million for the same period in 2011, as a result of the company’s contract with BARDA the seasonal and pandemic influenza. In conjunction with this increased BARDA revenue, the cost of contract revenue increased to $3.8 million in the third quarter of 2012, as compared to $2.2 million for the same period in 2011. R&D expenses increased to $6.4 million in the third quarter of 2012 as compared to $4 million for the same period in 2011, primarily due to increased cost relating to our RSV clinical trials, higher employee-related costs due to our increased overall R&D staff and expenses associated with our new manufacturing facility. General and administrative expenses decreased to $2.4 million in the third quarter of 2012, as compared to $2.7 million for the same period in 2011. As of September 30, 2012, the company had $28.4 million in cash, cash equivalents and short-term investments compared to $18.3 million as of December 31, 2011. This cash balance does not include proceeds from the recent $27 million equity offering that Stan mentioned earlier and with those funds added to our September 30 balance, we now have in excess of $50 million in cash on hand. To put that into perspective, this is the highest cash position the company has had since 2006 and we’ll provide for more than two years of operations. A key financial measurement that we monitor is the net cash used in operating activities. For the nine months ended September 30, 2012 cash used in operating activities was $14.1 million, compared to $20.8 million for the same period in 2011. A 32% reduction from the prior year period due primarily to revenue under the BARDA contract. That concludes our prepared remarks. And, operator, we’ll now open the call for questions.

Thank you. (Operator Instructions) Our first question comes from George Zavoico from MLV & Company. George Zavoico – MLV & Company: Hey, Stan and Fred and everyone, congratulations on a terrific quarter. Tremendous amount of progress you’ve made in last quarter and since the end of the last quarter. And a couple questions. Regarding the pandemic flu, you talked about the cross reactivity that really wasn’t part of the of BARDA goal, but it’s clearly very important. How do you plan to leverage that going forward?

This is Louis Fries. I think although not actually articulated by BARDA, as a key goal is obviously is a very important thing to them because the ability to lose that cross reactive immune response is critical in the response to a pandemic. The major feature of an influenza vaccine in responding to pandemic is time. And as the pandemic advances, the virus may not exactly match those that are available in those sequences that are available to help develop a vaccine. The broader cross reactivity of vaccine can generate lessons of concern that you need in absolutely exact match with the circulating virus. So in point of fact the vaccine that’s characterized by the ability to lose that cross reactive antibodies is exceedingly attractive to public health authorities. So we’ll leverage that by continuing to demonstrate that our vaccine does that with newer and more modern strains of avian viruses and provide those – that information to both BARDA and indeed FDA, both of whom are acutely aware that that’s a very desirable characteristic for a pandemic vaccine. George Zavoico – MLV & Company: Is that something that may be emerging because of the technology of the VLP technology as – and wouldn’t come up from more traditional (inaudible) avian flu virus in legs?

It’s probably multi-factorial to be honest with you. What we’ve observed with the VLP, you can indeed observe some cross reactivity with the traditional aid based vaccine, but typically, you observe that only in the context of adjuvant. In this instance, what we’ve observed is cross reactivity in the presence of adjuvant, but also even in the absence of adjuvant. And that’s very encouraging because it suggests that there is an intrinsic capacity of our antigen to more actively (inaudible) cross reactive immunity. And it’s worth noting that unadjuvanted pandemic vaccines have their own attractiveness. There are niche populations that both public health authorities and the FDA would prefer to give unadjuvanted vaccines too. And the fact that we can fulfill the criteria within unadjuvanted product, even if it is a little larger dose than one would usually want to give. It is really encouraging and should prove attractive. George Zavoico – MLV & Company: Okay. Thank you. Another question about the seasonal vaccine. You hit the three out of four on the zero conversion with the seasonal. And you are going through various optimization procedures. Might that also include adding adjuvant to the seasonal, because all of these trials have been without an adjuvant. Is that correct?

That is correct. I think that you have to – that might be a part of endgame strategy at some point, but one does have to approach that with some cautiousness. Unlike pandemic vaccines, seasonal vaccines are giving yearly. And there is a great deal of regulatory reserve regarding the desirability of repeatedly dosing people with adjuvanted vaccines. So our focus with the seasonal program is really to do as best as we possibly can with the unadjuvanted product. Into that end, we are undertaking a number of investigations, including whether we can adjust aspects of how the B virus antigens in particular are expressed in insect cells to make the expression of hemagglutinin more efficient to make sure it appears as native to the immune system as possible. And last but not least, to ensure their aspects of our downstream purification process don’t damage the hemagglutinin. We’re in a good position there with the strains, we’re in a good position with some B strains, other B strains appear to be more sensitive and that’s a problem, not only for us, but also for egg dry manufacturers. Some of the B strains, including the one that we experienced some difficulty with are real in the egg dry vaccine. They’re just not very good and this is a widely recognized problem. We’re actually in an advantageous situation and that we may be able to manipulate the actual molecular structure of some of the problem B antigens and hopefully get better expression and better immunogenicity. That’s a – and that’s an exercise we’re going through right now in a very careful, step-wise manner. I can’t say that we’ll have – that we’ll have success in that regard, but it’s something that we have the opportunity to look at and to switch to dials on as it were that the egg manufacturers do not. George Zavoico – MLV & Company: Does the outcome of those particular studies for optimization, you expect them to be done in order to meet the guidance you mentioned earlier of starting these trials in the second half of ‘13. I guess the faster you go, the sooner you can start the trial, right?

Yeah. I think that we’re carefully focusing our work in the optimization, so that we can get back in the clinic as quickly as we can, where we’re fully mindful of the time pressures of vaccine development. One of the things that we are looking here and we’ve already done it in the first – in the S205 trial that has been spoken about, we’re looking hard at stepping outside the classical paradigm of doing clinical trials, flu season by flu season. We will leverage both the northern and southern hemisphere flu seasons and in addition attempt adopting a strategy, which I’ve used in the past of testing flu vaccines in equatorial environments, where there is no real flu season, where there is transmission of flu year round, seek and actually start the trial any time. George Zavoico – MLV & Company: Okay. And finally, one question about the RSV. The elderly trial is a Phase 1, childbearing – women of childbearing ages is a Phase II, if the Phase 1 in elderly prove to be – will deliver positive results, will all you need after that is a confirmatory Phase II and in that regard if so, does that – success of that might be a faster path to market for the RSV?

I think that the Phase II development in the elderly has had several questions that will need to be flushed out and I would not characterize it as simple. While there is a very important and known burden of disease in the elderly, RSV disease in the elderly is not that well defined in terms of a clinical syndrome, not the way influenza is. And so we would have to undertake a number of parallel activities including characterizing that disease, including looking at our vaccine in substantially larger numbers of elderly subjects to make sure that we have a constructive immune response to make sure that we knew have long that the immune response lasted and how frequently we have to boost the vaccine. And with that information in hand then we’d be able to construct a well-designed pivotal trial. But it’s not – I would be disingenuous to say it’s a one trial path and then we’re ready for Phase III. George Zavoico – MLV & Company: Okay. Fair enough. Thank you very much and looking forward to the next set of results.

Thank you, George.

Thank you. Our next question comes from Greg Wade from Wedbush. Greg Wade – Wedbush: Thanks for taking my questions as well. So, Stan, with respect to the RSV opportunity, you now have the financial resources to press forward on your own time scale as you indicated. Can you tell us what’s your preferred path to registration is? The potential timeline for that and costs and whether your preference now is to perhaps retain the U.S. rights for the product and seek more regional partnership or you’re still maybe open to a global deal? Thanks.

Thanks, Greg. So you ask some questions that I don’t have full answers to because I don’t think we have charted out the complete cost of the multiple pathways to registration the basis. I think that the two nearest term ones that we’re looking at right now. I think as Louis mentioned our vaccinating pregnant women for maternal immunization trends and protecting the 0 to 3 years, 0 to 6 months old kids. That’s a relatively straightforward pathway that requires development of safety database and then just going into the trial. It takes some years to do that. I think we will be in pregnant women in 2013 and maybe not ‘14 but that would lead to a straightforward – ultimately a straightforward trial where you just measure kids whose moms got vaccinated and not and just follow their courses of disease. On the elderly, I think that – Louis described the pathway and so I think we’ll pursue both of those so that we get a proof of concept likely to be both in non-human primates and then ultimately in humans for both of those programs. We were hoping to be able to fund those programs on our own until we have that proof of concept and – but this is as an area of great interest to everybody in the vaccine world. And we’ll be – we’ll look at opportunities as they present themselves. Greg Wade – Wedbush: Thanks.

Thank you. Our next question comes from Ted Tenthoff from Piper Jaffray. Ted Tenthoff – Piper Jaffray: Hey, can you hear me, okay?

Yep.

Yes. Ted Tenthoff – Piper Jaffray: Excellent. And I apologize if this question has been asked. I was actually dropped from the call just for a second. But when it comes to the encouraging results of the pandemic vaccine, can you walk us through what kind of next steps are there? And how soon could that be available for license or if there is another pandemic? And kind of what would be your thoughts for commercialization around the pandemic vaccine? Thanks.

Well, the thoughts around commercialization are pretty straightforward. The U.S. government in a non-pandemic scenario has had a history of stockpiling. H5N1 vaccine, antigens and adjuvants and we expect that to continue at a level that’s the government doesn’t publish what the level will be. But – so that’s an opportunity for us. As I think it’s become clear to us through the data that we’ve generated that we have a differentiable vaccine, which has been very good results. The commercialization strategy beyond stockpiling with the U.S. government is the possibility of stockpiling with other governments. There are several countries that would be interested in stockpiling vaccine, then obviously, in pandemic scenario, there would be unlimited opportunity there for commercialization. So the pathway is going to be for pandemic influenza relatively straightforward. We do dose confirmation trials. We go into the elderly, the pivotal trial is going to be based upon immune responses and so it will be a pretty well known pathway right there. Ted Tenthoff – Piper Jaffray: And where do you think the earliest it would be available for stockpiling?

What – I think 2016, I think that’s about the right number. Ted Tenthoff – Piper Jaffray: For the pandemic one?

Yeah. For the pandemic one. Yeah. Ted Tenthoff – Piper Jaffray: Okay. Good. Well, congrats on all the progress. You guys have really been continuing to move the pipeline along and it’s a pleasure to see. Thanks so much.

Thank you, Ted.

Thank you. Our next question comes from Vernon Bernardino from Brinson Patrick. Vernon Bernardino – Brinson Patrick: Congrats again on the progress. Just one question about the revenue recognition. Could you just go over again please what are the components that or the drivers of revenue recognition and the cost of revenues, how are those recognized. And then I have a question about the quadrivalent?

Okay. Vernon, sure. So the major component is of course the BARDA contract. We do have a smaller government contract in Foot-and-Mouth Disease, but the contracts we have are cost reimbursable contracts with a fixed fee on the top and the way these contracts work is that as we do the work, incur the cost and we, at that point, recognize the revenue, we’ve built government and the government pays us. So it’s really on incurred cost of services that we provide under the contract as we incur those costs, we book the revenue, likewise in our P&L, we have cost of contract revenue and cost of contract revenue again is directly associated with the government contracts. It is for the direct costs associated with those contracts, such as subcontracting costs, the direct costs to produce the vaccine, the overhead costs and indirect costs associated with the government contract reside in R&D, so that gives you sort of the layout of how it flows. Vernon Bernardino – Brinson Patrick: But for modeling purposes, you cannot really look at and project some in relation to the clinical activities that we have seen so far or is that not true?

Well – yes, it is. We don’t provide, as you know, we don’t provide future financial guidance, but what I would say to you is certainly as we initiate new trials, we saw that as an example in the second quarter. If you look at the second quarter revenue, it was almost $8 million and that was driven on by the two pandemic trials that we spoke of earlier, that we’re running that quarter. So, yes, it’s definitely a linkage to the activity of the drop. Vernon Bernardino – Brinson Patrick: Okay. And then regarding the quadrivalent, you’ve already talked about the work done and the work that needs to be done. And maybe, Fred, you can also shed some light on this. Is it as simple as adding another strain and – because with applications from the current license manufacturers, it seems like that’s all they did and they’ve shown activity. With your vaccine, could you talk a little bit about how it relates to the gross margins that may change by adding a forward strain and what work needs to be done scientifically and clinically?

Let me address the question on cost then I’ll hand it to Dr. Fries to answer the clinical side of it. But, yeah, I mean, adding a forward strain clearly will have an effect on our cost of goods as it does with the egg based manufacturers. But we still view the process that we used to be a very cost effective one, as you know, Vernon, we do not have to spend the infrastructure costs that the egg-based technology has that, we use single use disposable technology. So it’s very cost effective. But without a doubt, it would be – there would be an increase due to the fourth avail that we go into this.

Yeah, but it’s unanswerable at this point because the other half of gross profit margins is the price. And so we don’t know where the industry price is going to be heading, until the other products are introduced next year. Vernon Bernardino – Brinson Patrick: Okay. But with – I haven’t been able to check very well, but AstraZeneca with its product, do you know offhand what their projected pricing is going to be?

I don’t. Vernon Bernardino – Brinson Patrick: Okay. Okay. And then one follow-up question. Regarding the manufacturing, what else needs to be done certification with the additional manufacturing facility?

Nothing. We’re selling – in the facility that we’ve been manufacturing it and it continues to produce GMP product for clinical trials in the new facility that we’ve been rebuilt that we’ve been getting ready to move into. I think the plans are that we’ll have finished construction next month. We’ll be validating the systems in the plants and we’ll be ready for manufacture in the first half of next year. That will be Okay.

I think we’ll be manufacturing product all throughout next year in both places. Vernon Bernardino – Brinson Patrick: Okay. So you still need to make a batch there and then validate and then get FDA approval?

Yeah. FDA doesn’t approve. They don’t come in and improve before you get into Phase III. So that doesn’t require any inspection or approval. Vernon Bernardino – Brinson Patrick: I see. But that they don’t need to look at any deficiencies, for example, or then regarding quality control and JMP verification?

No, other than what we’ve sent to them every time we make material and file and then IND amendment with the clinical manufacturing and control data that comes along with it. So they get to see that. Vernon Bernardino – Brinson Patrick: Okay.

This is just a standard in the practice of the industry. Vernon Bernardino – Brinson Patrick: Okay. Congrats again on the progress and thanks for taking my questions.

Thank you.

Thank you, Vernon.

Thank you. I’m showing no further questions in queue at this time.

Okay, everybody. Thank you very much for attending the call and we look forward to catching you up next quarter.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes our program. You may all disconnect and have a wonderful day.